Although the Emini opened with an expanding triangle buy setup on the first bar, the signal bar was a doji and it is in the middle of a 4 day trading range. The Emini then entered a tight trading range. Although there have been many swings up and down over the past 3 days, the days have been trading range days. Unless the bulls or bears can create a strong breakout with follow-through, today will probably also be mostly a trading range day and day traders will continue to be quick to take profits.
At the moment, the Emini is always in long and the bulls are trying for a test of yesterday’s high. However, the rally is not yet strong and it is more likely a bull leg in what will become a trading range. Even if the bulls get above Friday’s high, the Emini has been unable to hold above new all-time highs for the past few weeks, and this means that the upside breakout will probably not get too far before pulling back again. The bears are hoping that the 60 minute major trend reversal leads to a strong bear breakout, but there is no sign of that yet.
Today is Monday and traders are working on the appearance of the weekly chart. Last week was an outside up week and the bulls want to get above last week’s high, which was Friday’s high. The bears will sell just below, trying to trap the bulls and create a reversal down. At a minimum, they want an inside bar on the weekly chart. This would create a weekly ioi pattern, and this week would then become a sell signal bar for next week.
Here are my thoughts before the open. I mentioned several times in early November that November 11 to December 5 was an especially bullish time of the year. That does not mean that December 8 is bearish, but it does mean that the next few days are less likely to be strongly bullish.
Also, the rally of the past few days is testing the November 28 high after having moving average gap bars on the 60 minute candle chart. Today is a possible higher high major trend reversal entry, and there is a 60% chance that it will trigger today or soon. Once triggered, there is a 40% chance of a swing down (maybe 50 or more points) on the 60 minute chart.
The 60 minute bear swing traders need a bear breakout and they will then look to short. Bulls will look for the selling to fail and for the selloff attempt to become a bull flag. The stronger the bear breakout, the more likely the bears will win.
Day trading outlook for tomorrow’s Emini price action
The Emini had a strong bear breakout today, consistent with the 60 minute higher high major trend reversal. It fell in a spike and channel, but reversed up from a small wedge bottom. The wedge bottom will probably be followed by a second leg up tomorrow on the 5 minute chart. However, the 60 minute wedge top and the bear breakout on the 60 minute chart are strong enough so that a 2nd leg down is likely on the 60 minute chart after the 2nd leg up on the 5 minute chart. The dollar weakness today might also be signaling a pullback in the Emini.
Premarket price action analysis
See yesterday’s intraday market update report for today’s premarket analysis. Once there, scroll down to the heading, Day trading outlook for tomorrow’s Emini price action.
See the weekly update for a discussion of the weekly chart and for what to expect going into next week.